Jaswant may follow Nitish for a populist Union budget

Writing on the wall is clear. Finance Minister Jaswant Singh is all set to follow Railway Minister Nitish Kumar to 'please all' with a populist economic programme in the union budget to be unveiled this Friday.

Nitish Kumar's railway budget fortifies the expectation of an overtly populist package from Singh to bolster the electoral prospects of the ruling alliance.

Nitish Kumar, for the first time in the recent past, has not hiked fares for ordinary passengers, reduced fares for his high-end customers availing AC and first class, travellers in Rajdhani and Shatabdi trains.

The railway minister has also made an effective gesture to please the corporates by reducing freight charges on goods moved across the country. He, in effect, has sought to make up the revenues through enhanced volumes in tonnage.

A special gesture has also been made to garner support of senior citizens, newsmen and those suffering from serious ailments by offering them reduced travel rates.

Though Nitish Kumar could have utilised the opportunity to slash revenue expenditure from the prevailing 50 per cent, he went ahead to offer sops to everyone and allowed the non-capital expenditure to expand, which mostly constitutes the wage and pension bill.

If Singh takes a leaf from Kumar, then contrary to expectations, he would make a forceful attempt to please every section of the electorate, especially women and senior citizens, by offering higher interest rates on their investments and savings. The strong populist punch in Nitish Kumar's package also forces one to rethink on the possibility of 50 basis points reduction in interest rates on savings though an annual automatic reduction was proposed by Yashwant Sinha in the 2002-03 budget.

In the given backdrop, one would like to keep fingers crossed on the proposed labour reforms which are being opposed by the Sangh parivar and Left parties alike.

Further, there is a strong possibility of Jaswant Singh postponing a decision on all controversial issues like banks privatisation and announce measures to put more money in the hands of housewives as well as middle-class households through tax slabs revision, realign standard deduction rates, continue tax rebates and allow for concessions with regard to interest paid on housing loans.

Singh, in all probability, will also take steps to boost capital markets, keep the top corporates on right side of the ruling alliance and make a fresh attempt to attract more foreign investments and remittances.

If the railway budget is a pointer, then Jaswant Singh is bound to make "expansionary measures" to please the urban poor, rural population and the lower and middle classes.